USCB filing — read by section

Item 2. Management’s Discussion and Analysis

Item 2. 
Management's Discussion and Analysis of Financial Condition 
and Results of Operations 

 
 The 
following 
discussion 
and 
analysis 
is 
designed 
to 
provide 
a 
better 
understanding 
of 
the 
consolidated 
financial 
 condition and results 
of operations of 
the Company and 
the Bank, its 
wholly owned subsidiary, 
as of 
and for the 
three months 
 ended March 31, 
2026. This 
discussion and analysis 
is best read 
in conjunction 
with the unaudited 
consolidated financial 
 statements and related 
notes included in 
this Quarterly 
Report on Form 
10-Q (“Form 10-Q”) 
and the audited 
consolidated 
 financial 
statements 
and 
related 
notes 
included 
in 
the 
Annual 
Report 
on 
Form 
10-K 
(“2025 
Form 
10-K”) 
filed 
with 
the 
 Securities and Exchange Commission (“SEC”) for the year ended 
December 31, 2025. 
 This discussion contains forward-looking statements that involve risks, uncertainties and assumptions that could cause 
 actual results to differ materially 
from management's expectations. Factors that could cause 
such differences are discussed 
 in the sections 
entitled "Forward-Looking 
Statements" and Item 
1A “Risk Factors" 
below 
in Part II 
hereof and in 
the 2025 
 Form 10-K filed with the SEC which is available at the 
SEC’s website www.sec.gov. 
 Throughout 
this 
document, 
references 
to 
“we,” 
“us,” 
“our,” 
and 
“the 
Company” 
generally 
refer 
to 
USCB 
Financial 
 Holdings, Inc. 
 Forward-Looking Statements 
 This Form 10-Q 
contains statements 
that are not 
historical in 
nature are 
intended to 
be, and are 
hereby identified 
as, 
 forward-looking statements for purposes 
of the safe 
harbor provided by 
Section 21E of 
the Securities Exchange Act 
of 1934, 
 as amended. The 
words “may,” “will,” “anticipate,” “could,” “should,” 
“would,” “believe,” “contemplate,” “expect,” 
“aim,” “plan,” 
 “estimate,” “seek,” 
“continue,” and 
“intend,” as 
well as 
other similar 
words and 
expressions of 
the future, 
are intended 
to 
 identify forward-looking statements. 
These forward-looking statements 
include statements related to 
our projected growth, 
 anticipated future 
financial performance, 
and management’s 
long-term performance 
goals, as 
well as 
statements relating 
 to the anticipated 
effects on results 
of operations and 
financial condition from 
expected developments or 
events, or business 
 and growth strategies, including anticipated internal growth 
and potential future additional balance sheet restructuring. 
 These forward-looking statements involve significant risks and uncertainties that could cause our actual results to differ 
 materially from those anticipated in such statements. 
Potential risks and uncertainties include, but are not 
limited to: 
 •
 
the strength of the United States economy 
in general and the strength of the local 
economies in which we conduct 
 operations; 
 •
 
our ability to successfully manage interest rate risk, credit 
risk, liquidity risk, and other risks inherent to our industry; 
 •
 
the accuracy of our financial statement estimates and assumptions, including the estimates used for our allowance 
 for credit losses and deferred tax asset valuation allowance; 
 •
 
the efficiency and effectiveness of our 
internal control procedures and processes; 
 •
 
our ability 
to comply 
with the 
extensive laws 
and regulations 
to which 
we are 
subject, including 
the laws 
for each 
 jurisdiction where we operate; 
 •
 
adverse changes or conditions in capital and financial markets, including actual or potential stresses in 
the banking 
 industry; 
 •
 
deposit attrition and the level of our uninsured deposits; 
 •
 
legislative or regulatory changes, including the enactment 
of the One Big Beautiful Bill, and changes in accounting 
 principles, policies, 
practices or 
guidelines, including 
the on-going 
effects of 
the Current 
Expected Credit 
Losses 
 (“CECL”) standard; 
 •
 
the lack of a 
significantly diversified loan 
portfolio and our concentration 
in the South Florida 
market, including the 
 risks 
of geographic, 
depositor, 
and 
industry concentrations, 
including our 
concentration 
in 
loans secured 
by real 
 estate, in particular, commercial real 
estate; 
 •
 
the effects of climate change; 
 •
 
the concentration of ownership of our common stock; 
 •
 
fluctuations in the price of our common stock; 
 •
 
our ability to fund or access the capital markets at attractive 
rates and terms and manage our growth, both organic 
 growth as well as growth through other means, such as 
future acquisitions; 
 •
 
inflation, interest rate, unemployment rate, market and monetary 
fluctuations; 
 •
 
the effects of potential new or increased tariffs 
, 
retaliatory tariffs, and trade restrictions; 
 •
 
the impacts of international hostilities and geopolitical events; 
 •
 
increased competition and its 
effect on the pricing 
of our products and services 
as well as our interest 
rate spread 
 and net interest margin; 
 •
 
the loss of key employees; 
 •
 
the effectiveness of our risk management strategies, including operational risks, including, but not limited to, client, 
 employee, or third-party fraud and security breaches; and 

 
 
 Table of Contents 
 

 

 31 
USCB Financial Holdings, Inc. 
Q1 2026 Form 10-Q 
 •
 
other risks described in this Form 10-Q, the 2025 Form 
10-K and other filings we make with the SEC. 
 

 All 
forward-looking 
statements 
are 
necessarily 
only 
estimates 
of 
future 
results, 
and 
there 
can 
be 
no 
assurance 
that 
 actual results will 
not differ 
materially from expectations. 
Therefore, you are 
cautioned not to 
place undue reliance 
on any 
 forward-looking statements. 
Further, 
forward-looking statements 
included in 
this Form 
10-Q are 
made only 
as of the 
date 
 hereof, and we undertake 
no obligation to update 
or revise any forward-looking 
statement to reflect events 
or circumstances 
 after the date on which the statement is made or to reflect the occurrence of unanticipated events, unless required to do so 
 under the federal 
securities laws. You should also review the 
risk factors described in 
the 2025 Form 10-K 
and in the 
reports 
 the Company has filed or will file with the SEC. 
 Overview 
 The Company 
reported net 
income of 
$9.4 million 
or $0.51 
per diluted 
share of 
common stock 
for the 
three 
months 
 ended March 31, 
2026 compared 
to $7.7 
million or 
$0.38 per 
diluted share 
of common 
stock for 
the three 
months ended 
 March 31, 2025. 

 In evaluating our financial 
performance, the Company 
considers the level of 
and trends in net 
interest income, the 
net 
 interest 
margin, 
the 
cost 
of 
deposits 
and 
borrowings, 
the 
level and 
composition 
of non-interest 
income 
and 
non-interest 
 expense, performance ratios, 
asset quality ratios, regulatory capital ratios, and any 
significant event or transaction. 
 Unless otherwise 
stated, all 
period comparisons 
in the 
bullet points 
below are 
calculated at 
or for 
the quarter 
ended 
 March 31, 2026 
compared 
to at 
or for 
the 
quarter ended 
March 31, 
2025 and 
as of 
December 31, 
2025 
and annualized 
 where appropriate: 
 •
 
Net interest 
income before 
provision for 
credit losses 
for the three 
months ended 
March 31, 2026 
increased $2.9 
 million or 15.3% to $22.0 million from $19.1 million for the 
quarter ended March 31, 2025. 
 •
 
Net interest margin (“NIM”) expanded to 3.27% for the three months ended March 31, 2026 compared to 3.10% for 
 the three months ended March 31, 2025. 
 •
 
Total assets 
were $2.85 
billion at 
March 31, 2026, 
representing an 
increase of 
$168.4 million 
or 6.3% 
from March 31, 
 2025 and an increase of $54.2 million or 7.9% annualized from 
December 31, 2025. 
 

 •
 
Total loans 
held for 
investment (net 
of deferred 
cost/fees) 
were $2.24 
billion at 
March 31, 2026, 
representing 
an 
 increase of $204.8 million or 10.1% from March 31, 2025 and an increase of $51.8 million or 9.6% annualized from 
 December 31, 2025. 
 •
 
Total 
deposits 
were 
$2.49 
billion 
at 
March 31, 
2026, 
representing 
an 
increase 
of 
$184.0 
million 
or 
8.0% 
from 
 March 31, 2025 and an increase of $148.5 million or 
25.7% annualized from December 31, 2025. 

 •
 
Annualized return on average assets for the quarter 
ended March 31, 2026 was 1.34% compared to 
1.19% for the 
 quarter ended March 31, 2025. 

 •
 
Annualized return on average stockholders’ equity for the quarter ended March 31, 2026 was 17.07% compared to 
 14.15% for quarter ended March 31, 2025. 

 •
 
The ACL to total loans was 1.16% at March 31, 2026 and at December 31, 2025. 

 •
 
Non-performing loans to total loans was 0.16% at March 
31, 2026 and 0.14% at December 31, 2025. 

 •
 
At March 31, 
2026, 
the 
total risk 
-based capital 
ratios 
for the 
Company 
and 
the 
Bank were 
14.09% 
and 13. 
96%, 
 respectively. 
 •
 
Tangible book 
value per 
common share 
(a non-GAAP 
measure) was 
$12.23 at 
March 31, 2026, 
representing an 
 increase of $1.00 or 
8.9% annualized from 
$11.23 at March 
31, 2025. At March 31, 2026, 
tangible book value 
per 
 common share was 
negatively affected by 
($1.72) due to 
an accumulated comprehensive 
loss of $31.4 
million. At 
 March 31, 2025, tangible book value per common share was negatively affected by ($2.05) due to an accumulated 
 comprehensive loss 
of $41.1 
million. See 
“Reconciliation 
and Management 
Explanation for 
Non-GAAP Financial 
 Measures” included in this Form 10-Q for a reconciliation 
of this non-GAAP financial measure. 
 

 
 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Table of Contents 
 

 

 32 
USCB Financial Holdings, Inc. 
Q1 2026 Form 10-Q 
 Critical Accounting Policies and Estimates 
 The consolidated 
financial statements 
are prepared 
based on 
the application 
of U.S. 
Generally Accepted 
Accounting 
 Practices (“GAAP”), 
the most significant 
of which are 
described in Note 
1 “Summary 
of Significant Accounting 
Policies” in 
 the Company’s 2025 
Form 10-K and 
“Summary of Significant 
Accounting Policies” 
in Part I in 
this Form 10-Q. 
To 
prepare 
 consolidated 
financial 
statements 
in 
conformity 
with 
US 
GAAP, 
management 
makes 
estimates, 
assumptions, 
and 
 judgments based 
on available 
information. These 
estimates, assumptions, 
and judgments 
affect the 
amounts reported 
in 
 the consolidated financial 
statements and accompanying 
notes. These estimates, 
assumptions, and judgments 
are based 
 on information 
available as 
of the 
date of 
the financial 
statements and, 
as this 
information changes, 
actual results 
could 
 differ 
from 
the 
estimates, 
assumptions 
and 
judgments 
reflected 
in 
the 
consolidated 
financial 
statements. 
In 
particular, 
 management has 
identified accounting 
policies that, 
due to 
the estimates, 
assumptions and 
judgments inherent 
in those 
 policies, 
are 
critical 
to 
an 
understanding 
of 
our 
consolidated 
financial 
statements. 
Management 
has 
presented 
the 
 application of these policies to the Audit and Risk Committee of 
our Board of Directors. 

 Non-GAAP Financial Measures 
 This 
Form 
10-Q 
includes 
financial 
information 
determined 
by 
methods 
other 
than 
in 
accordance 
with 
GAAP. 
This 
 financial 
information 
includes 
certain 
operating 
performance 
measures. 
Management 
has 
included 
these 
non-GAAP 
 measures because it believes these measures 
may provide useful supplemental information 
for evaluating the Company’s 
 underlying performance 
trends. Further, 
management 
uses these 
measures in 
managing and 
evaluating 
the Company’s 
 business 
and 
intends 
to 
refer 
to 
them 
in 
discussions 
about 
our 
operations 
and 
performance. 
Operating 
performance 
 measures should be 
viewed in addition to, 
and not as 
an alternative to 
or substitute for, measures determined in 
accordance 
 with GAAP, 
and are 
not necessarily 
comparable to 
non-GAAP measures 
that may 
be presented 
by other 
companies. To 
 the extent applicable, 
reconciliations of 
these non-GAAP 
measures to the 
most directly comparable 
GAAP measures 
can 
 be found 
in the 
section “Reconciliation 
and Management 
Explanation of 
Non-GAAP Financial 
Measures” included 
in this 
 Form 10-Q.
 Segment Reporting 
 Management monitors the revenue streams for all its various 
products and services. The identifiable segments are not 
 material 
and 
operations 
are 
managed 
and 
financial 
performance 
is 
evaluated 
on 
an 
overall 
Company-wide 
basis. 
 Accordingly, all 
the financial service 
operations are 
considered by management 
to be 
aggregated in one 
reportable operating 
 segment.
 Results of Operations 
 General 
 The following tables present selected 
balance sheet, income statement, and 
profitability ratios for the dates 
and periods 
 indicated (in thousands, except ratios): 
 March 31, 2026 
 December 31, 2025 
 Consolidated Balance Sheets: 
 Total 
assets 
 $ 
 2,845,735 
 $ 
 2,791,540 
 Total 
loans 
 (1)
 $ 
 2,241,051 
 $ 
 2,189,257 
 Total 
deposits 
 $ 
 2,493,580 
 $ 
 2,345,080 
 Total 
stockholders' equity 
 $ 
 223,246 
 $ 
 217,183 
 (1) 
Loan amounts include deferred fees/costs. 

 
 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Table of Contents 
 

 

 33 
USCB Financial Holdings, Inc. 
Q1 2026 Form 10-Q 
 Three Months Ended March 31, 
 2026 
 2025 
 Consolidated Statements of Operations: 
 Net interest income before provision for credit losses 
 $ 
 22,048 
 $ 
 19,115 
 Total 
non-interest income 
 $ 
 4,150 
 $ 
 3,716 
 Total 
non-interest expense 
 $ 
 13,711 
 $ 
 12,052 
 Net income 

 $ 
 9,351 
 $ 
 7,658 
 Profitability: 
 Efficiency ratio 
 52.34% 
 52.79% 
 Net interest margin 

 3.27% 
 3.10% 
 The Company’s 
results 
of 
operations 
depend 
substantially 
on 
the 
levels 
of 
our 
net 
interest 
income 
and 
non-interest 
 income. Other factors contributing 
to the results of 
operations include our provision for 
credit losses, the level 
of non-interest 
 expense, and the provision for income taxes. 
 Three months ended March 31, 2026 compared to the three 
months ended March 31, 2025 

 Net income increased 
$1.7 million to 
$9.4 million for the 
three months ended 
March 31, 2026
 from $7.7 million 
for the 
 same period 
in 2025. The 
$1.7 million 
or 22.1% 
increase in 
the net 
income was 
primarily driven 
by higher 
income from 
a 
 larger loan portfolio combined with a reduction 
on rates paid of interest-bearing liabilities 
between periods. The increase in 
 net interest income was partially offset by an increase in 
non-interest expense between periods. 

 Net Interest Income 
 Net interest income 
is the difference 
between interest 
earned on interest-earning 
assets and interest 
paid on interest-
 bearing liabilities 
and is 
the primary 
driver of 
core earnings. 
Interest income 
is generated 
from interest 
and dividends 
on 
 interest-earning 
assets, 
including 
loans, 
investment 
securities 
and 
other 
short-term 
investments. 
Interest 
expense 
is 
 incurred from interest paid on interest-bearing liabilities, including interest 
-bearing deposits, FHLB advances, 
subordinated 
 debt, and other borrowings. 
 To evaluate net 
interest income, we 
measure and monitor 
(i) yields on 
loans and other 
interest-earning assets, (ii) 
the 
 costs of deposits 
and other funding 
sources, (iii) net 
interest spread, and 
(iv) net interest margin. 
Net interest spread is 
equal 
 to the difference between yields earned on interest-earning assets and rates paid on interest-bearing liabilities. Net interest 
 margin is 
equal to 
the annualized 
net interest 
income 
divided by 
average interest 
-earning assets. 
Because 
non-interest-
 bearing sources 
of funds, such as non-interest-bearing deposits and 
stockholders’ equity, also fund interest-earning assets, 
 net interest margin includes the indirect benefit of these 
non-interest-bearing funding sources. 
 Changes 
in 
market 
interest 
rates 
and 
interest 
rates 
we 
earn 
on 
interest-earning 
assets 
or 
pay 
on 
interest-bearing 
 liabilities, as well 
as the volume 
and types of 
interest-earning assets and interest-bearing 
and non-interest-bearing liabilities, 
 are usually the 
largest drivers 
of periodic changes 
in net interest 
spread, net interest 
margin and net 
interest income. 
Our 
 asset liability committee 
(“ALCO”) has 
in place asset-liability 
management techniques 
to manage major 
factors that 
affect 
 net interest income and net interest margin. 

 
 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Table of Contents 
 

 

 34 
USCB Financial Holdings, Inc. 
Q1 2026 Form 10-Q 
 The following 
table contains 
information related 
to average 
balances, average 
yields earned 
on assets, 
and average 
 costs of liabilities for the periods indicated (dollars in 
thousands): 
 Three Months Ended March 31, 
 2026 
 2025 
 Average 
 (1)
 Balance 
 Interest 
 Yield/Rate 
 (2)
 Average 
 (1)
 Balance 
 Interest 
 Yield/Rate 
 (2)
 Assets 
 Interest-earning assets: 
 Loans 
 (3)
 $ 
 2,177,734 
 $ 
 32,789 
 6.11% 
 $ 
 1,986,856 
 $ 
 30,245 
 6.17% 
 Investment securities 
 (4)
 454,262 
 3,411 
 3.05% 
 436,935 
 3,024 
 2.81% 
 Other interest-earnings assets 
 105,457 
 832 
 3.20% 
 75,182 
 709 
 3.82% 
 Total interest-earning assets 
 2,737,453 
 37,032 
 5.49% 
 2,498,973 
 33,978 
 5.51% 
 Non-interest-earning assets 
 97,264 
 

 

 107,620 
 

 

 Total assets 
 $ 
 2,834,717 
 $ 
 2,606,593 
 Liabilities and stockholders' equity 
 

 

 

 

 

 

 Interest-bearing liabilities: 
 Interest-bearing demand deposits 
 $ 
 52,099 
 310 
 2.41% 
 $ 
 53,611 
 338 
 2.56% 
 Saving and money market deposits 
 1,256,418 
 8,133 
 2.63% 
 1,199,027 
 9,335 
 3.16% 
 Time deposits 
 533,766 
 4,700 
 3.57% 
 399,509 
 3,918 
 3.98% 
 Total interest-bearing deposits 
 1,842,283 
 13,143 
 2.89% 
 1,652,147 
 13,591 
 3.34% 
 FHLB advances 
 110,045 
 1,040 
 3.83% 
 138,944 
 1,272 
 3.71% 
 Subordinated notes 
 39,313 
 801 
 8.26% 
 - 
 - 
 - % 
 Total interest-bearing liabilities 
 1,991,641 
 14,984 
 3.05% 
 1,791,091 
 14,863 
 3.37% 
 Non-interest-bearing demand deposits 
 584,784 
 563,040 
 

 Other non-interest-bearing liabilities 
 36,066 
 

 

 32,957 
 

 

 Total liabilities 
 2,612,491 
 2,387,088 
 Stockholders' equity 
 222,226 
 

 

 219,505 
 

 

 Total liabilities and stockholders' equity 
 $ 
 2,834,717 
 $ 
 2,606,593 
 Net interest income 
 $ 
 22,048 
 

 $ 
 19,115 
 

 Net interest spread 
 (5)
 2.44% 
 2.14% 
 Net interest margin 
 (6)
 3.27% 
 3.10% 
 (1) 
Average balances - Daily average balances are used 
to calculate yields/rates. 
 (2) 
Annualized. 
 (3) 
Average loan balances include 
deferred fees/costs and non-accrual loans. 
Interest income on loans includes accretion 
of deferred loan fees, net of 
 deferred loan costs. 
 (4) 
At fair value except for securities held to maturity. This amount includes 
FHLB stock. 
 (5) 
Net interest spread is the weighted average 
yield on total interest-earning assets minus the weighted 
average rate on total interest-bearing liabilities. 
 (6) 
Net interest margin is the ratio of net interest 
income to average total interest-earning assets. 
 Three months ended March 31, 2026 compared to the three months 
ended March 31, 2025 

 Net interest income before the provision for 
credit losses was $22.0 million for the 
three months ended March 31, 2026, 
 an increase 
of $2.9 
million or 
15.3%, from 
$19.1 million 
for the 
same period 
in 2025. This 
growth was 
primarily driven 
by 
 higher income from a 
larger loan portfolio 
and a reduction in 
the weighted average 
rates paid on interest-bearing 
liabilities 
 between periods. 

 

 The NIM 
was 
3.27% 
for the 
three months 
ended 
March 31, 
2026 and 
3.10% 
for 
the same 
period 
in 2025. 
The NIM 
 expansion of 17 basis 
points reflects primarily 
the increase in the 
loan portfolio average balance 
, 
along with a decrease 
in 
 the weighted average interest rate paid on interest-bearing 
liabilities, particularly in savings and money market deposits. 
 Provision for Credit Losses 
 The provision for credit losses represents a charge to 
earnings necessary to maintain an allowance for 
credit losses at 
 a level that, 
in management's evaluation, 
is adequate to 
provide coverage for 
all expected credit 
losses. The provision for 
 credit losses is impacted by variations in the size and composition of our loan and debt securities portfolio, recent historical 
 and 
projected 
future 
economic 
conditions, 
our 
internal 
assessment 
of 
the 
credit 
quality 
of 
the 
loan 
and 
debt 
securities 
 portfolios and net charge-offs. 

 
 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Table of Contents 
 

 

 35 
USCB Financial Holdings, Inc. 
Q1 2026 Form 10-Q 
 Three months ended March 31, 2026 compared to the three months 
ended March 31, 2025 

 The 
provision 
for 
credit 
losses 
was 
$801 
thousand 
for 
the 
three 
months 
ended 
March 31, 
2026 
compared 
to 
$681 
 thousand for the same period in 2025. The increase in the provision 
for credit losses was due to loan portfolio growth. 
 Non-Interest Income 
 Our services and products generate service charges and fees, mainly from our depository 
accounts. We also generate 
 income from gain on 
sale of loans though 
the SBA 7a loan program 
and the monetization 
of fees earned through 
our loan 
 swap program. In 
addition, we own 
and are beneficiaries 
of the 
life insurance policies 
covering certain of 
our key employees, 
 which policies generate income from the increase in the 
cash surrender values. 
 The following table presents the components of non-interest 
income for the periods indicated (in thousands): 
 Three Months Ended March 31, 
 2026 
 2025 
 Service fees 
 $ 
 3,100 
 $ 
 2,331 
 Gain on sale of securities available for sale, net 
 14 
 - 
 Gain on sale of loans held for sale, net 
 106 
 525 
 Other non-interest income 
 930 
 860 
 Total 
non-interest income 
 $ 
 4,150 
 $ 
 3,716 
 Three months ended March 31, 2026 compared to the three months 
ended March 31, 2025 

 Non-interest income for the 
three months ended March 
31, 2026 increased $434 
thousand or 11.7%, compared to 
the 
 same period in 2025. This increase 
was primarily driven by $1.5 million increase in income 
generated by the Company loan 
 swap program reported under service fees in the Consolidated 
Statements of Operations. 

 Non-Interest Expense 
 The following table presents the components of non-interest 
expense for the dates indicated (in thousands):
 Three Months Ended March 31, 
 2026 
 2025 
 Salaries and employee benefits 
 $ 
 8,570 
 $ 
 7,636 
 Occupancy 
 1,316 
 1,284 
 Regulatory assessment and fees 
 484 
 421 
 Consulting and legal fees 
 561 
 193 
 Network and information technology services 
 560 
 505 
 Other operating 
 2,220 
 2,013 
 Total 
non-interest expense 
 $ 
 13,711 
 $ 
 12,052 
 Three months ended March 31, 2026 compared to the three months ended 
March 31, 2025 

 Non-interest expense 
for the 
three months 
ended March 
31, 2026 
increased $1.7 
million or 
13.8%, compared 
to the 
 same period in 2025. 
The increase was primarily driven by 
an increase of $934 
thousand in salaries and employee 
benefits, 
 consisting 
of 
$412 
thousand 
related 
to 
merit 
increases 
and 
new 
full-time 
employee 
salaries, 
$342 
thousand 
increase 
in 
 payroll taxes, 
and $181 
thousand 
increase in 
additional 
stock-based 
compensation 
expense. In 
addition, consulting 
and 
 legal fees 
increased $368 
thousand, 
primarily due 
to model 
validation-related consulting 
expenses and 
human resources 
 consulting 
costs. Other 
non-interest 
expenses 
increased 
by $207 
thousand, 
driven by 
a $60 
thousand 
increase 
in FDIC 
 insurance expense and $183 thousand increase in promotional 
expenses between periods. 

 Provision for Income Tax 
 Fluctuations in the effective tax rate reflect the effect of the differences in the inclusion or deductibility of certain income 
 and expenses for 
income tax purposes. 
Therefore, future 
decisions on the 
investments we choose 
will affect our 
effective 
 tax rate. 
The cash 
surrender value 
of bank-owned 
life insurance 
policies covering 
key employees, 
purchasing municipal 
 bonds, and overall levels of taxable income will be important 
elements in determining our effective tax rate. 

 
 
 Table of Contents 
 

 

 36 
USCB Financial Holdings, Inc. 
Q1 2026 Form 10-Q 
 Three months ended March 31, 2026 compared to the three months ended 
March 31, 2025 

 Income tax expense 
for the three 
months ended 
March 31, 2026 
was $2.3 million 
as compared to 
$2.4 million for 
the 
 same period 
in 2025. 
The 
Company recognized 
a non-recurring 
$619 thousand 
income tax 
benefit in 
the first 
quarter of 
 2026 due to an 
adjustment to the deferred tax 
asset calculation from December 31, 
2025. The effective 
tax rate for the 
three 
 months ended March 31, 2026 was 19.98% compared to 24.16% 
for the same period in 2025. 

 For 
a 
further 
discussion 
of 
income 
taxes, 
see 
Note 
4 
“Income 
Taxes” 
to 
the 
unaudited 
Consolidated 
Financial 
 Statements in Item 1 of Part I of this Form 10-Q. 
 Analysis of Financial Condition 
 Total 
assets at 
March 31, 2026 
were $2.85 billion, 
an increase of 
$54.2 million, 
or 7.9% annualized, 
over total assets 
 of $2.79 billion at December 31, 2025. Total 
loans, net of deferred fees/costs, increased $51.8 million, or 9.6% annualized, 
 to $2.24 
billion at 
March 31, 2026 
compared 
to $2.19 
billion 
at December 
31, 2025. 
Total 
deposits 
increased 
by $148.5 
 million, or 25.7% annualized, to $2.49 billion at March 
31, 2026 compared to $2.35 billion at December 31, 2025. 
 Investment Securities 
 The investment portfolio 
is used and 
managed to provide 
liquidity through cash 
flows, marketability 
and, if necessary, 
 collateral for 
borrowings. The 
investment portfolio 
is also 
used as 
a tool 
to manage 
interest rate 
risk and 
the Company’s 
 capital 
market 
risk 
exposure. 
The 
philosophy 
of 
the 
portfolio 
is 
to 
maximize 
the 
Company’s 
profitability 
taking 
into 
 consideration the 
Company’s risk 
appetite and 
tolerance, manage 
its asset 
composition and 
diversification, and 
maintain 
 adequate risk-based capital ratios. 
 The investment portfolio 
is managed in accordance 
with the Board approved 
Asset and Liability 
Management (“ALM”) 
 policy, 
which 
includes 
investment 
guidelines. 
Such 
policy 
is 
reviewed 
at 
least 
annually 
or 
more 
frequently 
if 
deemed 
 necessary, 
depending on 
market conditions 
and/or unexpected 
events. The investment 
portfolio composition 
is subject to 
 change depending on the funding and liquidity needs of the Company, and the interest risk management objective directed 
 by 
the 
Asset-Liability 
Committee 
(“ALCO”). 
The 
portfolio 
of 
investments 
also 
can 
be 
used 
to 
modify 
the 
duration 
of 
the 
 balance 
sheet. 
The 
allocation 
of 
cash 
into 
securities 
takes 
into 
consideration 
anticipated 
future 
cash 
flows 
(uses 
and 
 sources) and all available sources of credit. 
 Our investment portfolio consists primarily of 
securities issued by the U.S. 
Government and U.S. Government Agencies 
 and 
mortgage-backed 
securities, 
collateralized 
mortgage 
obligations, 
corporate 
bonds, 
municipal 
securities, 
other 
debt 
 securities 
all 
with 
varying 
contractual 
maturities 
and 
coupons. 
Due 
to 
the 
optionality 
embedded 
in 
these 
securities, 
the 
 contractual maturities do not necessarily represent the 
expected life of the portfolio. Some of these securities 
will be called 
 or paid down 
prior to maturity 
depending on capital market 
conditions and expectations. The 
investment portfolio is 
regularly 
 reviewed by the Chief Financial Officer, 
Treasurer, 
and the ALCO of the Company to ensure an appropriate risk and return 
 profile as well as for adherence to the Company’s 
investment policies. 
 When evaluating AFS 
debt securities under 
ASC Topic 
326, the Company 
evaluates 
whether the decline 
in fair value 
 is attributable 
to credit losses 
or other 
factors like interest 
rate risk, 
using both quantitative 
and qualitative 
analyses, including 
 company performance analysis, review of credit ratings, vintage bonds, remaining payment terms, prepayment speeds and 
 analysis 
of 
macro-economic 
conditions. 
As 
a 
result 
of 
this 
evaluation, 
the 
Company 
concluded 
that 
no 
allowance 
was 
 required on AFS securities as of March 31, 2026. 
 At 
quarter 
end, 
HTM 
securities 
included 
$141.9 
million 
of 
U.S. 
Government 
and 
U.S. 
Government 
Agencies 
issued 
 bonds and 
mortgage-backed 
securities. 
Because 
of the 
explicit and/or 
implicit 
guarantee 
on these 
bonds, 
the 
Company 
 holds no reserves 
on these holdings. 
The remaining portion 
of the HTM 
portfolio is made 
up of $8.0 
million in investment 
 grade corporate 
bonds that 
mature in 
May of 
2026. Using 
the PD/LGD 
methodology and 
considering the 
short remaining 
 maturity of 
the HTM 
securities exposed to 
non
 ‑
 government credit risk, 
the Company 
estimated an 
allowance for credit 
losses 
 (“ACL”) of 
$0 as 
of March 31, 
2026. The 
book value 
for debt 
securities classified 
as HTM 
represents amortized 
cost less 
 ACL. 
 Aggregate 
AFS 
and 
HTM 
investment 
securities 
decreased 
$34.3 million 
to 
$427.1 million 
at 
March 31, 
2026 
from 
 $461.4 million at December 31, 2025. The decrease was primarily attributable to $38.2 million 
of AFS securities sold during 
 the quarter ended March 31, 2026. 

 
 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Table of Contents 
 

 

 37 
USCB Financial Holdings, Inc. 
Q1 2026 Form 10-Q 
 As of 
March 31, 2026, investment 
securities with a 
market value of 
$55.1 million were pledged 
to secure public 
deposits. 
 The investment portfolio does not contain any tax-exempt 
securities. 
 The following table 
presents the amortized 
cost and fair 
value of investment 
securities for 
the dates indicated 
(dollars 
 in thousands): 
 March 31, 2026 
 December 31, 2025 
 Available-for-sale: 
 Amortized 
 Cost 
 Fair Value 
 Amortized 
 Cost 
 Fair Value 
 U.S. Government Agency 
 $ 
 12,568 
 $ 
 11,598 
 $ 
 15,169 
 $ 
 14,144 
 Collateralized mortgage obligations 
 86,307 
 68,580 
 92,871 
 75,828 
 Mortgage-backed securities - residential 
 35,364 
 29,272 
 35,865 
 29,917 
 Mortgage-backed securities - commercial 
 156,895 
 149,035 
 174,622 
 168,108 
 Municipal securities 
 5,194 
 4,199 
 5,196 
 4,263 
 Bank subordinated debt securities 
 14,570 
 14,476 
 15,284 
 15,230 
 $ 
 310,898 
 $ 
 277,160 
 $ 
 339,007 
 $ 
 307,490 
 Held-to-maturity: 
 U.S. Government Agency 
 $ 
 40,748 
 $ 
 37,507 
 $ 
 41,158 
 $ 
 37,970 
 Collateralized mortgage obligations 
 50,175 
 45,071 
 51,431 
 46,786 
 Mortgage-backed securities - residential 
 35,963 
 33,263 
 37,221 
 34,718 
 Mortgage-backed securities - commercial 
 15,041 
 13,878 
 15,088 
 14,051 
 Corporate bonds 
 8,004 
 7,995 
 9,045 
 8,983 
 $ 
 149,931 
 $ 
 137,714 
 $ 
 153,943 
 $ 
 142,508 
 Allowance for credit losses - securities held-to-maturity 
 - 
 (2) 
 

 Securities held-to maturity, net of allowance for credit losses 
 $ 
 149,931 
 $ 
 153,941 
 The following 
table shows 
the weighted 
average yields, 
categorized by 
contractual maturity, 
for investment 
securities 
 as of March 31, 2026 (in thousands, except yields): 

 Within 1 year 
 After 1 year 
 through 5 years 
 After 5 years 
 through 10 years 
 After 10 years 
 Total 
 Amortized 
 Cost 
 Yield 
 Amortized 
 Cost 
 Yield 
 Amortized 
 Cost 
 Yield 
 Amortized 
 Cost 
 Yield 
 Amortized 
 Cost 
 Yield 
 Available-for-sale: 
 U.S. Government Agency 
 $ 
 - 
 - 
 $ 
 - 
 - 
 $ 
 - 
 - 
 $ 
 12,568 
 2.73% 
 $ 
 12,568 
 2.73% 
 Collateralized mortgage obligations 
 - 
 - 
 - 
 - 
 - 
 - 
 86,307 
 1.58% 
 86,307 
 1.58% 
 MBS - residential 
 - 
 - 
 - 
 - 
 - 
 - 
 35,365 
 2.43% 
 35,364 
 2.43% 
 MBS - commercial 
 - 
 - 
 - 
 - 
 - 
 - 
 156,895 
 4.08% 
 156,895 
 4.08% 
 Municipal securities 

 - 
 - 
 - 
 - 
 5,194 
 1.87% 
 - 
 - 
 5,194 
 1.87% 
 Bank subordinated debt securities 
 - 
 - 
 2,000 
 7.86% 
 12,570 
 5.74% 
 - 
 - 
 14,570 
 6.03% 
 $ 
 - 
 - 
 $ 
 2,000 
 7.86% 
 $ 
 17,764 
 4.61% 
 

 $ 
 291,135 
 3.08% 
 $ 
 310,898 
 3.20% 
 Held-to-maturity: 
 U.S. Government Agency 
 $ 
 7,982 
 1.02% 
 $ 
 18,034 
 1.27% 
 $ 
 1,478 
 2.39% 
 $ 
 13,254 
 2.10% 
 $ 
 40,748 
 1.53% 
 Collateralized mortgage obligations 
 - 
 - 
 - 
 - 
 - 
 - 
 50,175 
 1.66% 
 50,175 
 1.66% 
 MBS - residential 
 30 
 2.96% 
 8,918 
 1.64% 
 - 
 - 
 27,015 
 2.32% 
 35,963 
 2.15% 
 MBS - commercial 
 - 
 - 
 3,038 
 1.63% 
 - 
 - 
 12,003 
 2.56% 
 15,041 
 2.37% 
 Corporate bonds 
 8,004 
 2.97% 
 - 
 - 
 - 
 - 
 - 
 - 
 8,004 
 2.97% 
 $ 
 16,016 
 2.00% 
 $ 
 29,990 
 1.42% 
 $ 
 1,478 
 2.39% 
 $ 
 102,447 
 2.00% 
 $ 
 149,931 
 1.88% 
 Loans 
 Loans are the 
largest category of 
interest-earning assets 
on the unaudited 
Consolidated Balance 
Sheets, and usually 
 provide higher yields than the 
remainder of the interest 
-earning assets. Higher yields 
typically carry greater 
inherent credit 
 and liquidity risks in comparison to lower yield assets. The Company manages and mitigates such risks in accordance with 
 the credit and ALM policies, risk tolerance and balance 
sheet composition. 

 
 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Table of Contents 
 

 

 38 
USCB Financial Holdings, Inc. 
Q1 2026 Form 10-Q 
 The following table shows the loan portfolio composition 
as of the dates indicated (in thousands): 
 

 March 31, 2026 
 December 31, 2025 
 Total 
 Percent of 
 Total 
 Total 
 Percent of 
 Total 
 Residential real estate 
 $ 
 346,917 
 15.5 
 % 
 $ 
 307,692 
 14.1 
 % 
 Commercial real estate 
 1,259,642 
 56.4 
 % 
 1,244,835 
 57.0 
 % 
 Commercial and industrial 
 291,333 
 13.0 
 % 
 295,548 
 13.5 
 % 
 Correspondent banks 
 128,722 
 5.8 
 % 
 127,968 
 5.9 
 % 
 Consumer and other 

 207,794 
 9.3 
 % 
 207,215 
 9.5 
 % 
 Total 
gross loans 
 2,234,408 
 100.0 
 % 
 2,183,258 
 100.0 
 % 
 Plus: Deferred fees/costs 
 6,643 
 

 5,999 
 Total 
loans net of deferred fees/costs 
 2,241,051 
 2,189,257 
 Less: Allowance for credit losses 
 26,102 
 25,500 
 Total 
net loans 
 $ 
 2,214,949 
 $ 
 2,163,757 
 

 Total 
loans, 
net of 
deferred 
fees/costs, 
increased 
by $51.8 
million, 
or 9.6% 
annualized 
to $2.24 
billion, at 
March 31, 
 2026 compared to December 31, 2025. The residential real estate loan segment had the most 
significant balance increase 
 compared to December 31, 2025. 

 Our loan 
portfolio continues 
to grow, 
with commercial 
real estate 
lending being 
the primary 
focus which 
represented 
 approximately 56.4% 
of the 
total gross 
loan portfolio 
as of 
March 31, 2026. 
Our loan 
growth strategy 
since inception 
has 
 been reflective of the market in which we operate and 
of our strategic plan as approved by the Board. 
 The growth experienced in recent 
years is primarily due to 
implementation of our relationship-based banking model 
and 
 the success of our relationship managers in competing for new business in a highly competitive metropolitan area. Many of 
 our 
larger 
loan 
clients 
have 
long-term 
relationships 
with 
members 
of 
our 
senior 
management 
team 
or 
our 
relationship 
 managers that date back to former institutions. 

 From a 
liquidity perspective, 
our loan 
portfolio provides 
us with 
additional 
liquidity due 
to repayments 
or unexpected 
 prepayments. The following table shows maturities and sensitivity to interest rate changes of the loan portfolio at March 31, 
 2026 (in thousands): 
 Due in 1 year or 
 less 
 Due in 1 to 5 
 years 
 Due after 5 to 15 
 years 
 Due after 15 
 years 
 Total 
 Residential real estate 
 $ 
 7,403 
 $ 
 69,792 
 $ 
 61,936 
 $ 
 207,786 
 $ 
 346,917 
 Commercial real estate 
 62,790 
 573,987 
 617,411 
 5,454 
 1,259,642 
 Commercial and industrial 
 11,107 
 117,619 
 119,110 
 43,497 
 291,333 
 Correspondent banks 
 128,722 
 - 
 - 
 - 
 128,722 
 Consumer and other 
 4,096 
 1,267 
 22,625 
 179,806 
 207,794 
 Total 
gross loans 
 $ 
 214,118 
 $ 
 762,665 
 $ 
 821,082 
 $ 
 436,543 
 $ 
 2,234,408 
 Interest rate sensitivity: 
 Fixed interest rates 
 $ 
 175,825 
 $ 
 197,208 
 $ 
 145,518 
 $ 
 306,009 
 $ 
 824,560 
 Floating or adjustable rates 
 38,293 
 565,457 
 675,564 
 130,534 
 1,409,848 
 Total 
gross loans 
 $ 
 214,118 
 $ 
 762,665 
 $ 
 821,082 
 $ 
 436,543 
 $ 
 2,234,408 
 The information 
presented 
in the 
table above 
is based 
upon the 
contractual 
maturities of 
the individual 
loans, which 
 may be 
subject to 
renewal at 
their contractual 
maturity. 
Renewals will 
depend on 
approval by 
our credit 
department and 
 balance sheet 
composition at the 
time of 
the analysis, 
as well 
as any 
modification of terms 
at the 
loan’s maturity. Additionally, 
 maturity 
concentrations, 
loan 
duration, 
prepayment 
speeds 
and 
other 
interest 
rate 
sensitivity 
measures 
are 
discussed, 
 reviewed, and analyzed by the ALCO. Decisions on term 
/rate modifications are discussed as well. 

 As of 
March 31, 2026, 
approximately 63.1% 
of the 
loan portfolio 
has adjustable/variable 
rates and 
36.9% of 
the loan 
 portfolio 
has 
fixed 
rates. 
The 
adjustable/variable 
rate 
loans 
re-price 
to 
different 
benchmarks 
and 
tenors 
and 
in 
different 
 periods of time. By contractual characteristics, there are no 
material concentrations on anniversary repricing. 

 
 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Table of Contents 
 

 

 39 
USCB Financial Holdings, Inc. 
Q1 2026 Form 10-Q 
 Asset Quality 

 Our asset quality grading 
analysis estimates the capability of 
the borrower to repay 
the contractual obligation of 
the loan 
 agreement as scheduled or at all. The Company’s internal credit risk grading system is based on experiences with similarly 
 graded loans. Internal credit 
risk grades are reviewed 
at least once a 
year, and 
more frequently as 
needed. Internal credit 
 risk ratings 
may change 
based on 
management’s 
assessment of 
the results 
from the 
annual review, 
portfolio monitoring, 
 and other developments observed with borrowers. 

 The internal credit risk grades used by the Company to 
assess the credit worthiness of a loan are shown below: 
 Pass 
 – Loans indicate different levels of satisfactory 
financial condition and performance. 

 Special Mention
 
– Loans classified as special mention have a potential weakness 
that deserves management’s 
 close attention. If left uncorrected, these potential weaknesses 
may result in deterioration of the repayment 
 prospects for the loan or of the institution’s 
credit position at some future date. 

 Substandard 
 – Loans classified as substandard are inadequately protected 
by the current net worth and paying 
 capacity of the obligator or of the collateral pledged, if 
any. Loans so classified 
have a well-defined weakness or 
 weaknesses that jeopardize the liquidation of the debt. 
They are characterized by the distinct possibility that the 
 institution will sustain some loss if the deficiencies are 
not corrected. 

 Doubtful
 
– Loans classified as doubtful have all the weaknesses inherent 
in those classified at substandard, with 
 the added characteristic that the weaknesses make collection 
or liquidation in full on the basis of currently existing 
 facts, conditions, and values, highly questionable and improbable. 

 Loss 
 – Loans classified as loss are considered uncollectible. 
 Loan credit exposures by internally assigned grades are 
as follows for the dates indicated (in thousands): 

 March 31, 2026 
 Pass 
 Special Mention 
 Substandard 
 Doubtful 
 Total 
 Residential real estate 
 $ 
 343,468 
 $ 
 488 
 $ 
 2,961 
 $ 
 - 
 $ 
 346,917 
 Commercial real estate 
 1,241,104 
 16,153 
 2,385 
 - 
 1,259,642 
 Commercial and industrial 
 289,041 
 805 
 1,487 
 - 
 291,333 
 Correspondent banks 
 128,722 
 - 
 - 
 - 
 128,722 
 Consumer and other 

 207,794 
 - 
 - 
 - 
 207,794 
 $ 
 2,210,129 
 $ 
 17,446 
 $ 
 6,833 
 $ 
 - 
 $ 
 2,234,408 
 December 31, 2025 
 Pass 
 Special Mention 
 Substandard 
 Doubtful 
 Total 
 Residential real estate 
 $ 
 304,276 
 $ 
 916 
 $ 
 2,500 
 $ 
 - 
 $ 
 307,692 
 Commercial real estate 
 1,230,823 
 11,613 
 2,399 
 - 
 1,244,835 
 Commercial and industrial 
 293,169 
 907 
 1,472 
 - 
 295,548 
 Correspondent banks 
 127,968 
 - 
 - 
 - 
 127,968 
 Consumer and other 

 207,215 
 - 
 - 
 - 
 207,215 
 $ 
 2,163,451 
 $ 
 13,436 
 $ 
 6,371 
 $ 
 - 
 $ 
 2,183,258 

 
 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Table of Contents 
 

 

 40 
USCB Financial Holdings, Inc. 
Q1 2026 Form 10-Q 
 Non-Performing Assets 
 The following table presents non-performing assets as 
of the dates shown (in thousands, 
except ratios): 
 March 31, 2026 
 December 31, 2025 
 Non-accrual loans 
 $ 
 3,640 
 $ 
 3,138 
 Loans past due over 90 days and still accruing 
 - 
 - 
 Total 
non-performing loans 
 $ 
 3,640 
 $ 
 3,138 
 Other real estate owned 
 - 
 - 
 Total 
non-performing assets 
 $ 
 3,640 
 $ 
 3,138 
 Asset quality ratios: 
 Allowance for credit losses to total loans 
 1.16% 
 1.16% 
 Allowance for credit losses to non-performing loans 
 717% 
 813% 
 Non-performing loans to total loans 
 0.16% 
 0.14% 
 Non-performing 
assets 
include 
all 
loans 
categorized 
as 
non-accrual, 
other 
real 
estate 
owned 
(“OREO”) 
and 
other 
 repossessed assets. Problem loans for 
which the collection or 
liquidation in full is 
reasonably uncertain are placed on 
a non-
 accrual status. This determination is based on current existing facts concerning collateral values and the paying 
capacity of 
 the 
borrower. 
When 
the 
collection 
of 
the 
full 
contractual 
balance 
is 
unlikely, 
the 
loan 
is 
placed 
on 
non-accrual 
to 
avoid 
 overstating the Company’s income for a loan 
with increased credit risk. 

 If the 
principal or 
interest on 
a commercial 
loan becomes 
due and 
unpaid for 
90 days 
or more, 
the loan 
is placed 
on 
 non-accrual status as of 
the date it becomes 
90 days past due 
and remains in non-accrual 
status until it meets 
the criteria 
 for restoration to accrual status. 
Residential loans, on 
the other hand, are placed 
on non-accrual status when 
the principal 
 or interest 
becomes due 
and unpaid 
for 120 
days or 
more and remains 
in non-accrual 
status until 
it meets 
the criteria 
for 
 restoration 
to 
accrual 
status. 
Restoring 
a 
loan 
to 
accrual 
status 
is 
possible 
when 
the 
borrower 
resumes 
payment 
of 
all 
 principal and interest payments for a period of six consecutive months and the Company 
has a documented expectation of 
 repayment of the remaining contractual principal and interest or the loan becomes secured and in the process of collection. 
 The 
Company 
may 
grant 
a 
loan 
concession 
to 
a 
borrower 
experiencing 
financial 
difficulties. 
This 
determination 
is 
 performed 
during 
the 
annual 
review 
process 
or 
whenever 
problems 
surface 
regarding 
the 
borrower’s 
ability 
to 
repay 
in 
 accordance with 
the original 
terms of 
the loan 
or line 
of credit. 
The concessions 
are given 
to the 
debtor in 
various forms, 
 including interest rate reductions, principal 
forgiveness, extension of maturity date, 
waiver or deferral of 
payments and other 
 concessions intended to minimize potential losses. 
 For further discussion of 
non-performing loans and 
borrowers experiencing financial 
difficulties, see 
Note 3 “Loans” to 
 the unaudited Consolidated Financial Statements in Item 
1 of Part 1 of this Form 10-Q. 
 Allowance for Credit Losses 
 The 
ACL 
on 
loans 
represents 
an 
amount 
that, 
in 
management's 
evaluation, 
is 
adequate 
to 
provide 
coverage 
for 
all 
 expected future credit losses on outstanding loans. Additionally, 
qualitative adjustments are made to the ACL when, based 
 on 
management’s 
judgment, 
there 
are 
factors 
impacting 
the 
allowance 
estimate 
not 
considered 
by 
the 
quantitative 
 calculations. See Note 3 “Loans” in Item 1 of Part 1 of 
this Form 10-Q for more information on the ACL. 

 
 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Table of Contents 
 

 

 41 
USCB Financial Holdings, Inc. 
Q1 2026 Form 10-Q 
 The following 
table presents 
ACL on 
loans and 
net charge-offs 
to average 
loans by 
type for 
the periods 
indicated (in 
 thousands): 
 Residential 
 Real 
 Estate 
 Commercial 
 Real Estate 
 Commercial 
 and 
 Industrial 
 Correspondent 

 Banks 
 Consumer 
 and Other 
 Total 
 Three Months Ended March 31, 2026 
 

 

 

 

 

 

 

 

 

 

 

 

 Beginning balance 
 $ 
 5,908 
 $ 
 9,476 
 $ 
 4,814 
 $ 
 1,015 
 $ 
 4,287 
 $ 
 25,500 
 Provision for credit losses 
 (1)
 (644) 
 456 
 512 
 3 
 271 
 598 
 Recoveries 
 6 
 - 
 4 
 - 
 - 
 10 
 Charge-offs 
 - 
 - 
 - 
 - 
 (6) 
 (6) 
 Ending Balance 

 $ 
 5,270 
 $ 
 9,932 
 $ 
 5,330 
 $ 
 1,018 
 $ 
 4,552 
 $ 
 26,102 
 Average loans 

 $ 
 304,162 
 $ 
 1,267,713 
 $ 
 235,352 
 $ 
 128,849 
 $ 
 241,658 
 $ 
 2,177,734 
 Net charge-offs (recoveries) to average 

 loans 
 (2)
 

 (0.01)% 
 - 
 (0.01)% 
 - 
 0.01% 
 (0.00)% 
 (1) Provision for credit losses excludes a $205 thousand provision due to unfunded commitments included in accrued interest and 
 other liabilities and a $2 thousand release related to investment securities held to maturity. 
 (2) Annualized. 
 Residential 
 Real Estate 
 Commercial 
 Real Estate 
 Commercial 
 and 
 Industrial 
 Correspondent 

 Banks 
 Consumer 
 and Other 
 Total 
 Three Months Ended March 31, 2025 
 

 

 

 

 

 

 Beginning balance 
 $ 
 5,121 
 $ 
 8,788 
 $ 
 4,633 
 $ 
 654 
 $ 
 4,874 
 $ 
 24,070 
 Provision for credit losses 
 (1)
 (12) 
 409 
 (204) 
 163 
 316 
 672 
 Recoveries 
 6 
 - 
 5 
 - 
 - 
 11 
 Charge-offs 
 - 
 - 
 - 
 - 
 (13) 
 (13) 
 Ending Balance 

 $ 
 5,115 
 $ 
 9,197 
 $ 
 4,434 
 $ 
 817 
 $ 
 5,177 
 $ 
 24,740 
 Average loans 
 $ 
 301,230 
 $ 
 1,142,985 
 $ 
 257,241 
 $ 
 87,214 
 $ 
 198,186 
 $ 
 1,986,856 
 Net charge-offs (recoveries) to average 
 loans
 
(2)
 (0.01)% 
 - 
 (0.01)% 
 - 
 0.03% 
 0.00% 
 (1) Provision for credit losses excludes a $10 thousand provision due to unfunded commitments included in accrued interest and other 
 liabilities and a $1 thousand release related to investment securities held to maturity. 
 (2) Annualized. 

 
 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Table of Contents 
 

 

 42 
USCB Financial Holdings, Inc. 
Q1 2026 Form 10-Q 
 The 
Federal 
Open 
Market 
Committee 
(“FOMC”) 
economic 
forecasts 
as 
of 
March 31, 
2026, 
showed 
moderate 
 improvement in 
the forecast 
for real 
GDP and 
a slight 
improvement in 
the unemployment 
rate. Fannie 
Mae House 
Price 
 Index (“HPI”) forecast reflected an improvement in national 
housing prices. The Company continued to adjust 
the HPI index 
 effect on 
the 1-4 
Family loan 
portfolio with 
a qualitative 
factor because 
Florida housing 
prices are 
performing better 
than 
 national levels. 
The Q-factor 
scorecard was 
updated based 
on the 
latest portfolio 
stress test 
and the 
resulting maximum 
 loss calculation. 

 Our ACL 
included residential 
loans. To 
assess the 
potential impact 
of changes 
in qualitative 
factors related 
to these 
 loans, 
management 
performed 
a sensitivity 
analysis. 
The Company 
evaluated 
the 
impact 
of the 
HPI 
used 
in calculating 
 expected losses on the residential loan segment. As of March 31, 
2026, for every 100 basis points increase in the HPI, the 
 forecast 
reduces 
reserves 
by 
approximately 
$239 
thousand 
and 
about 
1 
basis 
points 
to 
the 
reserve 
coverage 
ratio, 
 everything else being 
constant. This sensitivity 
analysis provides a 
hypothetical result to 
assess the sensitivity 
of the ACL 
 and does 
not represent 
a change 
in management’s 
judgement. For 
comparative purposes, 
in prior 
periods the 
Company 
 stress tested 
the commercial 
real estate 
loan subcategory 
based on collateral 
code (1st 
lien, commercial 
property) rather 
 than the non
 ‑
 owner
 ‑
 occupied subsegment. 
 As of March 31, 2026, the Company stress tested 
two qualitative factors within the non
 ‑
 owner
 ‑
 occupied subsegment of 
 the 
commercial 
real 
estate 
loan portfolio, 
as 
it 
represents 
the 
largest 
segment 
of 
the 
Company’s 
portfolio. 
The 
analysis 
 evaluated 
the 
impact 
of 
changing 
the 
qualitative 
factors 
from 
no 
risk 
to 
maximum 
loss 
to 
assess 
the 
sensitivity 
of 
the 
 allowance for credit losses (“ACL”). This 
stress resulted in a hypothetical increase 
of $6.7 million, or 25.7%, 
in the ACL. The 
 sensitivity analysis is intended solely to illustrate the responsiveness 
of the ACL to changes in qualitative assumptions and 
 does not represent 
a change in 
management’s judgment. 
For comparative purposes, 
in prior periods 
the Company stress 
 tested the commercial real estate loan subcategory based on collateral code (1st lien, commercial property) rather than the 
 non
 ‑
 owner
 ‑
 occupied subsegment. 
 Bank-Owned Life Insurance 
 As of March 31, 2026, the combined cash surrender value of all bank-owned life insurance (“BOLI”) policies was 
$59.9 
 million. 
Changes 
in 
cash 
surrender 
value 
are 
recorded 
to 
other 
non-interest 
income 
in 
the 
unaudited 
Consolidated 
 Statements of Operations. The Company has 
BOLI policies with five insurance carriers. The Company is the beneficiary of 
 these policies. 
 Deposits 
 Customer deposits are the 
primary funding source for 
the Bank’s growth. 
Through our network of 
banking centers, we 
 offer a competitive array of deposit 
accounts and treasury management services designed 
to meet our customers’ business 
 needs. Our primary 
deposit customers 
are small-to-medium 
sized businesses (“SMBs”), 
and the personal 
business of the 
 owners and operators of these SMBs, as well as the retail/consumer 
relationships of the employees of these businesses. 

 The following table 
presents the daily 
average balance and 
average rate paid 
on deposits by 
category for 
the periods 
 presented (in thousands, except ratios): 
 Three Months Ended March 31, 
 2026 
 2025 
 Average Balance 
 Average Rate 
 Paid 
 Average Balance 
 Average Rate 
 Paid 
 Non-interest bearing demand deposits 
 $ 
 584,784 
 0.00% 
 $ 
 563,040 
 0.00% 
 Interest-bearing demand deposits 
 52,099 
 2.41% 
 53,611 
 2.56% 
 Saving and money market deposits 
 1,256,418 
 2.63% 
 1,199,027 
 3.16% 
 Time deposits 
 533,766 
 3.57% 
 399,509 
 3.98% 
 Total 
 $ 
 2,427,067 
 2.20% 
 $ 
 2,215,187 
 2.49% 

 
 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Table of Contents 
 

 

 43 
USCB Financial Holdings, Inc. 
Q1 2026 Form 10-Q 
 The Company has a 
granular deposit portfolio 
with outstanding balances 
comprised of 55.7% in 
commercial deposits, 
 26.9% in 
personal 
deposits, 
8.9% in 
public funds 
(which are 
partially collateralized) 
and 8.6% 
in brokered 
deposits. The 
 brokered deposits balance at March 31, 2026 was $215.0 
million and $256.8 million at December 31, 2025. 

 As of March 31, 2026, the Company has approximately 
21 thousand deposit accounts with the majority 
of 
which were 
 personal accounts, approximately 
12 thousand or 59.6%. 
The estimated average account 
size in our deposit 
portfolio was 
 approximately $120 thousand as of March 31, 2026. 

 The 
amount 
of 
uninsured 
deposits 
are 
estimated 
based 
on 
the 
FDIC 
deposit 
insurance 
limit 
of 
$250 
thousand 
per 
 account holder for all deposit accounts at the Company. 
The total estimated percentage of uninsured deposits 
was 54% at 
 March 31, 
2026 
and 
51% 
at 
December 31, 
2025. 
The 
Company 
offers 
Insured 
Cash 
Sweep 
(“ICS”) 
and 
Certificate 
 of
 Deposit Account 
Registry 
Service 
(“CDARS”) 
deposit 
products 
to 
fully 
insure 
our 
clients. 
The 
deposit 
balance 
in 
 ICS/CDARS was $186.5 million at March 31, 2026 and was 
$183.2 million at December 31, 2025. 
 The following table shows scheduled maturities of uninsured 
time deposits as of March 31, 2026 (in thousands): 
 March 31, 2026 
 Three months or less 
 $ 
 24,318 
 Over three through six months 
 55,400 
 Over six through twelve months 
 16,536 
 Over twelve months 
 101,211 
 $ 
 197,465 
 Other Liabilities 
 The Company collects from commercial and residential loan customers 
funds which are held in escrow for future 
 payment of real estate taxes and insurance. These escrow 
funds are disbursed by the Company directly to the 
insurance 
 companies and taxing authority of the borrower. 
Escrow funds are recorded as accrued interest and other 
liabilities in the 
 consolidated balance sheet. 

 As of March 31, 2026, escrow balances totaled $15.4 
million compared to $8.1 million at December 31, 2025. 
The 
 increase reflects the normal growth in escrow accounts 
pending tax and insurance payments. 

 Borrowings 
 FHLB Advances 
 As 
a 
member 
of 
the 
FHLB 
of 
Atlanta, 
we 
are 
eligible 
to 
obtain 
advances 
with 
various 
terms 
and 
conditions. 
This 
 accessibility to additional 
funding allows us 
to efficiently and 
timely meet both 
expected and unexpected 
outgoing cash flows 
 and collateral needs without adversely affecting 
either daily operations or the financial condition of the 
Company. 
 As of March 31, 2026, we had 
$11.0 million of fixed-rate advances and $42.0 million of daily-rate advances outstanding 
 with 
the 
FHLB, 
with 
weighted 
average 
interest 
rates 
of 
3.76% 
and 
3.88%, 
maturing 
in 
January 
2028 
and 
May 
2026, 
 respectively, as detailed 
in the table below. 

 The following table presents the FHLB advances as of 
March 31, 2026 (in thousands): 
 March 31, 2026 
 Interest Rate 
 Type of Rate 
 Maturity Date 
 Amount 
 3.76% 
 Fixed 
 January 24, 2028 
 11,000 
 3.88% 
 Fixed 
 May 22, 2026 
 42,000 
 $ 
 53,000 
 The 
Company 
has 
also 
established 
Federal 
Funds 
lines 
of 
credit 
with 
our 
upstream 
correspondent 
banks 
and 
the 
 Federal 
Reserve 
Bank 
of 
Atlanta 
Discount 
Window 
to 
manage 
temporary 
fluctuations 
in 
our 
daily 
cash 
balances. 
As 
of 
 March 31, 2026, there were no outstanding balances with 
any of these additional liquidity sources. 

 
 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Table of Contents 
 

 

 44 
USCB Financial Holdings, Inc. 
Q1 2026 Form 10-Q 
 Subordinated Notes 
 On 
August 
14, 
2025, 
the 
Company 
entered 
into 
a 
Subordinated 
Note 
Purchase 
Agreement 
with 
certain 
qualified 
 institutional 
buyers 
pursuant 
to 
which 
the 
Company 
sold 
and 
issued 
$40.0 
million 
in 
aggregate 
principal 
amount 
of 
its 
 7.625% Fixed-to-Floating Rate 
Subordinated Notes due 2035. 
The Notes were issued by 
the Company to the purchasers 
 at a price equal to 100% of their face amount. The subordinated debt was originally issued at a cost of $760 thousand. The 
 subordinated debt, 
net of 
amortized 
expenses, 
was $39.3 
million, reflecting 
the 
scheduled expense 
recognition 
over the 
 term of the instruments. 
The subordinated notes 
are presented net of 
these costs on the 
consolidated balance sheet. 
The 
 Notes 
were 
offered 
and 
sold 
by 
the 
Company 
in 
a 
private 
placement 
transaction 
in 
reliance 
on 
exemptions 
from 
the 
 registration requirements of the Securities Act of 
1933, as amended (the “Securities Act”), pursuant 
to Section 4(a)(2) of the 
 Securities Act and Rule 506(b) of Regulation D thereunder. 
For additional information, see the Company Form 
8-K filed on 
 August 14, 2025. 
 Off-Balance Sheet Arrangements 
 We engage 
in various financial 
transactions in 
our operations 
that, under GAAP, 
may not be 
included on 
the balance 
 sheet. To 
meet the financing needs of our customers, 
we may include commitments to extend credit and standby 
letters of 
 credit. To 
a varying 
degree, such 
commitments involve 
elements of 
credit, market, 
and interest 
rate risk 
in excess 
of the 
 amount recognized in the consolidated balance sheets. We maintain an allowance for off-balance 
sheet credit risk which is 
 recorded under 
accrued interest 
and other 
liabilities on 
the unaudited 
Consolidated 
Balance Sheets. 
The ACL 
related to 
 unfunded commitments 
at March 31, 
2026 was 
$957 
thousand and 
at December 31, 
2025 was 
$752 thousand. 
The increase 
 was primarily driven by an increase in unfunded commitments. 

 Since commitments associated with letters of 
credit and commitments to extend 
credit may expire unused, the 
amounts 
 shown 
do 
not 
necessarily 
reflect 
actual 
future 
cash 
funding 
requirements. 
The 
following 
table 
presents 
lending 
related 
 commitments outstanding as of the dates indicated (in thousands 
): 
 March 31, 2026 
 December 31, 2025 
 Commitments to grant loans and unfunded lines of credit 
 $ 
 179,642 
 $ 
 161,606 
 Standby and commercial letters of credit 
 3,073 
 2,700 
 Total 
 $ 
 182,715 
 $ 
 164,306 
 Commitments to extend credit are agreements to lend funds to a client, as long as there is no violation of any condition 
 established 
in 
the 
contract, 
for 
a 
specific 
purpose. 
Commitments 
generally 
have 
variable 
interest 
rates, 
fixed 
expiration 
 dates or 
other 
termination 
clauses 
and 
may require 
payment 
of 
a fee. 
Since many 
of the 
commitments 
are 
expected to 
 expire without being 
fully drawn, the 
total commitment 
amounts disclosed 
above do not 
necessarily represent 
future cash 
 requirements. 
 Unfunded lines of credit represent unused portions of credit facilities to our current borrowers that represent no change 
 in credit risk in our portfolio. Lines 
of credit generally have variable interest 
rates. The maximum potential amount 
of future 
 payments we could 
be required to 
make is represented 
by the contractual 
amount of the 
commitment, less 
the amount of 
 any advances made. 
 Letters of credit are 
conditional commitments issued 
by us to guarantee 
the performance of a 
client to a third 
party. 
In 
 the event of nonperformance by 
the client in accordance with the 
terms of the agreement with the 
third party, 
we would be 
 required to fund 
the commitment. 
If the commitment 
is funded, we 
would be entitled 
to seek recovery 
from the client 
from 
 the underlying collateral, 
which can include 
commercial real estate, 
physical plant and 
property, inventory, receivables, cash 
 or marketable securities. 
 Asset and Liability Management Committee 
 Members 
of 
senior 
management 
and 
our 
Board 
make 
up 
the 
asset 
and 
liability 
management 
committee, 
or 
ALCO. 
 Senior management 
is responsible 
for ensuring 
that Board 
approved strategies 
and policies 
for managing 
and mitigating 
 risks are appropriately executed within the designated 
lines of authority and responsibility in a timely manner. 
 ALCO 
oversees 
the 
establishment, 
approval, 
implementation, 
and 
review 
of 
interest 
rate 
risk, 
management, 
and 
 mitigation strategies, ALM related policies, ALCO procedures 
and risk tolerances and appetite. 
 While some degree of Interest Rate Risk (“IRR”) is inherent to the banking business, we believe our ALCO implements 
 sound risk management practices to identify, 
quantify, 
monitor, and limit IRR exposures. 

 
 
 Table of Contents 
 

 

 45 
USCB Financial Holdings, Inc. 
Q1 2026 Form 10-Q 
 When assessing the 
scope of IRR 
exposure and impact 
on the 
consolidated balance sheet, 
cash flows and 
consolidated 
 statement 
of 
operations, 
management 
considers 
both 
earnings 
and 
economic 
impacts. 
Asset 
price 
variations, 
deposit 
 volatility and reduced 
earnings or outright 
losses could adversely 
affect the Company’s 
liquidity, 
performance, and 
capital 
 adequacy. 
 Income simulations are 
used to assess 
the impact 
of changing rates 
on earnings under 
different interest rates 
scenarios, 
 yield curve 
shapes 
and 
time 
horizons. 
These 
simulations 
utilize 
both 
instantaneous 
and 
parallel 
changes 
in 
the 
level of 
 interest rates, as well as 
non-parallel changes such as 
changing slopes (flat and steepening) 
and twists of the yield 
curve. 
 Static 
simulation 
models 
are 
based 
on 
current 
exposures 
and 
assume 
a 
constant 
balance 
sheet 
with 
no 
new 
growth. 
 Dynamic simulation 
is also 
utilized to 
have a 
more comprehensive 
assessment 
on IRR. 
This simulation 
relies on, 
and in 
 assumptions regarding 
changes in 
existing lines 
of business, 
new business, 
management strategies 
and client 
expected 
 behavior. 
 To 
have 
a 
more 
complete 
picture 
of 
IRR, 
the 
Company 
also 
evaluates 
the 
economic 
value 
of 
equity 
(“EVE”). 
This 
 assessment 
allows 
us 
to 
measure 
the 
degree 
to 
which 
the 
economic 
values 
will 
change 
under 
different 
interest 
rate 
 scenarios (parallel and non-parallel). The economic value approach focuses on a longer-term time horizon and captures all 
 future cash flows expected 
from existing assets and 
liabilities. The economic value 
model utilizes a static 
approach in that 
 the analysis 
does not 
incorporate new 
business; rather, 
the analysis 
shows a 
snapshot in 
time of 
the risk 
inherent in 
the 
 balance sheet. 
 Market and Interest Rate Risk Management 
 According to 
our ALCO 
model, As 
of March 
31, 2026, 
both the 
static and 
dynamic ALM 
simulations indicate 
that the 
 Bank’s balance sheet remains liability
 ‑
 sensitive in Year 1, positioning the Bank to benefit in a declining rate environment as 
 liabilities reprice more 
quickly than assets, 
resulting in favorable 
Net Interest Income 
(NII) outcomes. Beginning 
in Year 
2, 
 both models transition toward 
an asset
 ‑
 sensitive posture, reflecting projected 
balance
 ‑
 sheet growth, continued variable
 ‑
 rate 
 loan 
production, 
and 
changes 
in 
balance
 ‑
 sheet 
mix 
over 
time. 
This 
progression 
is 
consistent 
with 
management’s 
 forward
 ‑
 looking assumptions embedded in the dynamic model. 
 Management’s 
interest 
rate 
positioning 
reflects 
a 
deliberate 
balance 
between 
earnings 
stability 
and 
balance 
sheet 
 flexibility, 
particularly 
given the 
Bank’s relationship 
driven deposit 
base and 
variable rate 
lending profile 
within the 
South 
 Florida market. 
 Modeled NII and Economic Value of Equity (EVE) outcomes remain well within ALCO policy limits across all rate shock 
 scenarios. The 
ALM model 
incorporates a 
wide range 
of assumptions, 
including asset 
prepayment speeds, 
non
 ‑
 maturity 
 deposit 
beta 
and 
decay 
assumptions, 
pricing 
correlations, 
deposit 
truncations, 
and 
key 
interest 
rate 
drivers. 
Given 
the 
 inherent estimation involved 
in these assumptions, 
actual results may 
differ from 
modeled outcomes, particularly 
as static 
 measures 
do 
not 
incorporate 
potential 
management 
actions 
in 
response 
to 
changes 
in 
market 
conditions 
or 
customer 
 behavior. 
 EVE sensitivity remains compliant with policy guidelines, with greater volatility observed in rising
 ‑
 rate scenarios, driven 
 by 
asset 
and 
liability 
convexity. 
In 
higher
 ‑
 rate 
environments, 
the 
value 
of 
longer
 ‑
 term 
assets 
declines 
more 
rapidly, 
 particularly as loan prepayments slow, while certain funding sources reprice less immediately. Conversely, 
in declining
 ‑
 rate 
 scenarios, faster prepayments and 
quicker asset repricing 
help mitigate downside EVE 
exposure. Importantly, EVE volatility 
 declined quarter over quarter, reflecting balance
 ‑
 sheet actions taken during the period and an overall 
reduction in structural 
 interest rate risk. 
 The improvement in the Bank’s 
IRR profile was driven primarily by a 
reduction in asset duration, while liability 
duration 
 remained 
relatively 
stable. 
Increased 
variable
 ‑
 rate 
loan 
production, 
higher 
prepayment 
activity, 
and 
targeted 
portfolio 
 repositioning contributed to a shorter effective 
asset duration and reduced optionality risk. 

 Overall, 
the 
Bank 
remains 
well 
positioned 
to 
manage 
current 
interest 
rate 
volatility, 
with 
limited 
exposure 
under 
 rising
 ‑
 rate scenarios 
and favorable 
positioning in 
a declining
 ‑
 rate environment. 
Management continues 
to actively 
review 
 ALM 
results 
and 
retains 
the 
flexibility, 
consistent 
with 
ALCO 
policy, 
to 
adjust 
asset 
and 
liability 
duration 
through 
 balance
 ‑
 sheet strategies as market conditions evolve. Results 
and related strategies are reviewed quarterly 
with ALCO and 
 adjusted as appropriate. 

 
 
 Table of Contents 
 

 

 46 
USCB Financial Holdings, Inc. 
Q1 2026 Form 10-Q 
 Liquidity 
 Liquidity is defined 
as a Company’s 
capacity to meet 
its cash and 
collateral obligations at 
a reasonable cost. 
Maintaining 
 an adequate level of liquidity depends on the Company’s ability to 
efficiently meet both expected and unexpected cash flow 
 and collateral needs without adversely affecting 
either daily operations or the financial condition of the 
Company. 
 Liquidity risk 
is the 
risk that 
we will 
be unable 
to meet 
our short-term 
and long-term 
obligations as 
they become 
due 
 because of an inability 
to liquidate assets or 
obtain relatively adequate funding. The 
Company’s obligations, and the funding 
 sources 
used 
to 
meet 
them, 
depend 
significantly 
on 
our 
business 
mix, 
balance 
sheet 
structure 
and 
composition, 
credit 
 quality of our assets and the cash flow profiles of our on- 
and off-balance sheet obligations. 
 In managing 
inflows and 
outflows, 
management 
regularly 
monitors situations 
that can 
give rise 
to increased 
liquidity 
 risk. These 
include funding 
mismatches, market 
constraints on 
the ability 
to convert 
assets (particularly 
investments) into 
 cash or in accessing sources of funds (i.e., market liquidity), 
pledging assets and contingent liquidity events. 
 Changes in macroeconomic conditions, as well as exposure to credit, market, operational, legal, cybersecurity risk and 
 reputational 
risks, 
could 
have 
an 
unexpected 
impact 
on 
the 
Company’s 
liquidity 
risk 
profile 
and 
are 
factored 
into 
the 
 assessment of liquidity and the ALM framework. 
 Management has established 
a comprehensive and 
holistic management process for 
identifying, measuring, monitoring 
 and 
mitigating 
liquidity 
risk. 
Liquidity 
management 
also 
reflects 
the 
Bank’s 
granular 
mix 
of 
consumer 
and 
commercial 
 relationships, 
which 
management 
believes 
enhances 
funding 
stability 
and 
mitigates 
reliance 
on 
more 
rate 
sensitive 
 wholesale 
funding 
sources. 
Due 
to 
its 
critical 
importance 
to 
the 
viability 
of 
the 
Company, 
liquidity 
risk 
management 
is 
 integrated into our risk management processes, Contingency 
Funding Plan and ALM policy. 
 Critical elements of our liquidity 
risk management include: effective corporate governance consisting of 
oversight by the 
 Board and 
ALCO, and 
active involvement 
of senior 
management; appropriate 
strategies, policies, 
procedures, 
and limits 
 used 
to 
identify 
and 
mitigate 
liquidity 
risk; 
comprehensive 
liquidity 
risk 
measurement 
and 
monitoring 
systems 
(including 
 assessments 
of 
the 
current 
and 
prospective 
cash 
flows 
or 
sources 
and 
uses 
of 
funds) 
that 
are 
commensurate 
with 
the 
 complexity and business activities of the Company; active management of intraday liquidity and collateral; an appropriately 
 diverse mix 
of existing 
and potential 
future funding 
sources; adequate 
levels of 
highly liquid 
marketable securities 
free of 
 legal, regulatory, or operational impediments, 
that can be 
used to meet 
liquidity needs in 
stressful situations; comprehensive 
 contingency 
funding 
plans 
that 
sufficiently 
address 
potential 
adverse 
liquidity 
events 
and 
emergency 
cash 
flow 
 requirements; 
and 
internal 
controls and 
internal 
audit 
processes 
sufficient 
to 
determine 
the 
adequacy 
of 
the 
institution’s 
 liquidity risk management process. 
 We 
expect 
funds 
to 
be 
available 
from 
several 
basic 
banking 
activity 
sources, 
including 
the 
core 
deposit 
base, 
the 
 repayment and maturity of loans and investment security 
cash flows. Other potential funding sources include 
federal funds 
 purchased, brokered 
certificates of 
deposit, listing 
certificates of 
deposit, Fed 
Funds lines 
and borrowings 
from the 
FHLB 
 Atlanta. Accordingly, our liquidity resources were at sufficient levels to 
fund loans and meet other 
cash needs as necessary. 
 As 
of 
March 
31, 
2026, 
the 
Company 
had 
$336 
million 
in 
available 
liquidity 
on 
balance 
sheet, 
including 
$261 
million 
in 
 unpledged securities 
(excluding 
Unencumbered 
HTM securities) 
available to 
use as 
collateral 
and 
$79 million 
in excess 
 cash. The Company had an 
additional $457 million 
in off-balance sheet liquidity, excluding access to brokered deposits and 
 other off-balance sheet sources of funding. 
 Management believes current liquidity levels remain appropriate relative 
to the Bank’s risk appetite, balance sheet 
size, 
 and anticipated funding needs under both base case and stressed 
scenarios. 

 
 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Table of Contents 
 

 

 47 
USCB Financial Holdings, Inc. 
Q1 2026 Form 10-Q 
 Capital Adequacy 
 As of 
March 31, 2026, 
the Bank 
was well 
capitalized 
under the 
FDIC’s 
prompt corrective 
action framework. 
We also 
 follow the capital conservation buffer framework, and as of March 31, 2026, we exceeded the capital conversation buffer 
in 
 all capital 
ratios, 
according 
to 
our actual 
ratios. 
The 
following 
table 
presents 
the 
capital 
ratios 
for 
the 
Bank 
at the 
dates 
 indicated (in thousands, except ratios). 
 Actual 
 Minimum Capital 
 Requirements 

 To be Well Capitalized 
 Under Prompt Corrective 
 Action Provisions 
 Amount 
 Ratio 
 Amount 
 Ratio 
 Amount 
 Ratio 
 March 31, 2026 
 Total 
risk-based capital 
 $ 
 309,408 
 13.96 
 % 
 $ 
 177,286 
 8.00 
 % 
 $ 
 221,607 
 10.00 
 % 
 Tier 1 risk-based capital 
 $ 
 282,348 
 12.74 
 % 
 $ 
 132,964 
 6.00 
 % 
 $ 
 177,286 
 8.00 
 % 
 Common equity tier 1 capital 
 $ 
 282,348 
 12.74 
 % 
 $ 
 99,723 
 4.50 
 % 
 $ 
 144,045 
 6.50 
 % 
 Leverage ratio 
 $ 
 282,348 
 9.88 
 % 
 $ 
 114,333 
 4.00 
 % 
 $ 
 142,917 
 5.00 
 % 
 December 31, 2025 
 Total 
risk-based capital 
 $ 
 299,596 
 13.67 
 % 
 $ 
 175,387 
 8.00 
 % 
 $ 
 219,234 
 10.00 
 % 
 Tier 1 risk-based capital 
 $ 
 273,342 
 12.47 
 % 
 $ 
 131,541 
 6.00 
 % 
 $ 
 175,387 
 8.00 
 % 
 Common equity tier 1 capital 
 $ 
 273,342 
 12.47 
 % 
 $ 
 98,655 
 4.50 
 % 
 $ 
 142,502 
 6.50 
 % 
 Leverage ratio 
 $ 
 273,342 
 9.65 
 % 
 $ 
 113,296 
 4.00 
 % 
 $ 
 141,620 
 5.00 
 % 
 The Company is 
not subject to 
regulatory capital ratios 
imposed by Basel 
III on bank 
holding companies because 
the 
 Company is deemed to be a small bank holding company. 
 Impact of Inflation 
 Our 
Consolidated 
Financial 
Statements 
and 
related 
notes 
have 
been 
prepared 
in 
accordance 
with 
U.S. 
GAAP, 
 which require the measurement of financial 
position and operating results in terms 
of historical dollars, without considering 
 the changes in the relative purchasing power of money over 
time due to inflation. The impact of inflation is mostly reflected 
 in the increased cost of operations; inflation can negatively impact overhead expenses and other variable 
expenses. Unlike 
 most industrial 
companies, 
nearly all 
our 
assets 
and liabilities 
are monetary 
in nature. 
As a 
result, 
interest 
rates 
have a 
 greater impact on our performance than the effects of inflation. Periods of high inflation are often accompanied by relatively 
 higher interest rates, and 
periods of low inflation 
are accompanied by relatively 
lower interest rates. Inflationary 
conditions 
 may also influence customer 
deposit behavior, 
loan demand, and pricing 
dynamics, which management 
considers as part 
 of its ongoing balance
 ‑
 sheet and earnings planning processes. 

 
 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Table of Contents 
 

 

 48 
USCB Financial Holdings, Inc. 
Q1 2026 Form 10-Q 
 Reconciliation and Management Explanation of Non 
-GAAP Financial Measures 
 Management 
has 
included 
these 
non-GAAP 
measures 
because 
it 
believes 
these 
measures 
may 
provide 
useful 
 supplemental information 
for evaluating 
the Company’s 
underlying performance 
trends. Further, 
management uses 
these 
 measures 
in 
managing 
and 
evaluating 
the 
Company’s 
business 
and 
intends 
to 
refer 
to 
them 
in 
discussions 
about 
our 
 operations and performance. 
Operating performance 
measures should be 
viewed in addition 
to, and not 
as an alternative 
 to or 
substitute 
for, 
measures 
determined 
in 
accordance 
with 
GAAP, 
and 
are 
not 
necessarily 
comparable 
to non-GAAP 
 measures that may be presented by other 
companies. The following table reconciles the non-GAAP financial measurement 
 of operating net income available to 
common shareholders for the periods presented (in thousands, 
except per share data):
 USCB FINANCIAL HOLDINGS, INC. 
 NON-GAAP FINANCIAL MEASURES (UNAUDITED) 
 (Dollars in thousands) 
 As of or For the Three Months Ended 
 3/31/2026 
 12/31/2025 
 9/30/2025 
 6/30/2025 
 3/31/2025 
 Pre-tax pre-provision ("PTPP") income:
 (1)
 Net income 
 $ 
 9,351 
 $ 
 1,363 
 $ 
 8,939 
 $ 
 8,140 
 $ 
 7,658 
 Plus: Income tax expense 
 2,335 
 1,911 
 2,866 
 2,599 
 2,440 
 Plus: Provision for credit losses 
 801 
 480 
 105 
 1,031 
 681 
 PTPP income 
 $ 
 12,487 
 $ 
 3,754 
 $ 
 11,910 
 $ 
 11,770 
 $ 
 10,779 
 

 

 PTPP return on average assets:
 (1)
 

 

 PTPP income 
 $ 
 12,487 
 $ 
 3,754 
 $ 
 11,910 
 $ 
 11,770 
 $ 
 10,779 
 Average assets 
 $ 
 2,834,717 
 $ 
 2,799,863 
 $ 
 2,798,115 
 $ 
 2,677,198 
 $ 
 2,606,593 
 PTPP return on average assets 
 (2)
 1.79% 
 0.53% 
 1.69% 
 1.76% 
 1.68% 
 

 

 Operating net income:
 (1)
 

 

 Net income 
 $ 
 9,351 
 $ 
 1,363 
 $ 
 8,939 
 $ 
 8,140 
 $ 
 7,658 
 Less: Net gains (losses) on sale of securities 
 14 
 (7,498) 
 (28) 
 - 
 - 
 Less: Tax effect on sale of securities 
 (4) 
 1,900 
 7 
 - 
 - 
 Plus: Tax (benefit) liability expense from prior periods 
 (619) 
 (3) 
 1,096 
 (4) 
 - 
 - 
 - 
 Operating net income 
 $ 
 8,722 
 $ 
 8,057 
 $ 
 8,960 
 $ 
 8,140 
 $ 
 7,658 
 

 

 Operating return on average assets:
 (1)
 

 

 Operating net income 
 $ 
 8,722 
 $ 
 8,057 
 $ 
 8,960 
 $ 
 8,140 
 $ 
 7,658 
 Average assets 
 $ 
 2,834,717 
 $ 
 2,799,863 
 $ 
 2,798,115 
 $ 
 2,677,198 
 $ 
 2,606,593 
 Operating return on average assets 
 (2)
 1.25% 
 1.14% 
 1.27% 
 1.22% 
 1.19% 
 

 

 Operating return on average equity:
 (1)
 

 

 Operating net income 
 $ 
 8,722 
 $ 
 8,057 
 $ 
 8,960 
 $ 
 8,140 
 $ 
 7,658 
 Average equity 
 $ 
 222,226 
 $ 
 212,393 
 $ 
 225,316 
 $ 
 228,492 
 $ 
 219,505 
 Operating return on average equity 
 (2)
 15.92% 
 15.05% 
 15.78% 
 14.29% 
 14.15% 
 

 Operating Revenue:
 (1)
 

 
Net interest income 
 $ 
 22,048 
 

 $ 
 22,207 
 

 $ 
 21,274 
 

 $ 
 21,034 
 

 $ 
 19,115 
 
Plus: Non-interest income 
 

 4,150 
 (4,178) 
 3,684 
 

 3,370 
 

 3,716 
 
Less: Net gains (losses) on sale of 
securities
 14 
 (7,498) 
 (28) 
 - 
 - 
 
Operating revenue 
 $ 
 26,184 
 $ 
 25,527 
 $ 
 24,986 
 $ 
 24,404 
 $ 
 22,831 
 

 Operating Efficiency Ratio:
 (1)
 

 
Total non-interest expense 
 $ 
 13,711 
 

 $ 
 14,275 
 

 $ 
 13,048 
 

 $ 
 12,634 
 

 $ 
 12,052 
 
Operating revenue 
 $ 
 26,184 
 $ 
 25,527 
 $ 
 24,986 
 $ 
 24,404 
 $ 
 22,831 
 
Operating efficiency ratio 
 52.36% 
 55.92% 
 52.22% 
 51.77% 
 52.79% 
 (1) 
The Company believes these non-GAAP measurements are 
key indicators of the ongoing earnings power 
of the Company. 
 (2) 
Annualized. 
 (3) The Company recognized a $619 thousand 
income tax benefit in first quarter of 2026 due 
to an adjustment to the deferred tax asset calculation 
from 
 2025. 
 (4) State tax liability expenses for 2024 and for 
the first three quarters of 2025 were recognized 
during the fourth quarter of 2025. The state 
tax expense 
 is related to taxes due on interest income on 
loans whose collateral are located outside of 
the State of Florida. 

 
 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Table of Contents 
 

 

 49 
USCB Financial Holdings, Inc. 
Q1 2026 Form 10-Q 
 USCB FINANCIAL HOLDINGS, INC. 
 NON-GAAP FINANCIAL MEASURES (UNAUDITED) 
 (Dollars in thousands, except per share data) 
 As of or For the Three Months Ended 
 3/31/2026 
 12/31/2025 
 9/30/2025 
 6/30/2025 
 3/31/2025 
 Tangible book value per common share (at period-end):
 (1)
 Total stockholders' equity 
 $ 
 223,246 
 $ 
 217,183 
 $ 
 209,095 
 $ 
 231,583 
 $ 
 225,088 
 Less: Intangible assets 
 - 
 - 
 - 
 - 
 - 
 Tangible stockholders' equity
 (2)
 $ 
 223,246 
 $ 
 217,183 
 $ 
 209,095 
 $ 
 231,583 
 $ 
 225,088 
 Total shares issued and outstanding (at period-end):
 Total common shares issued and outstanding 
 18,257,400 
 18,137,885 
 18,107,385 
 20,078,385 
 20,048,385 
 Tangible book value per common share
 (3)
 $ 
 12.23 
 $ 
 11.97 
 $ 
 11.55 
 $ 
 11.53 
 $ 
 11.23 
 Operating diluted net income per common share:
 (1)
 Operating net income 
 $ 
 8,722 
 $ 
 8,057 
 $ 
 8,960 
 $ 
 8,140 
 $ 
 7,658 
 Total weighted average diluted shares of common stock 
 18,454,006 
 18,348,725 
 19,755,820 
 20,295,794 
 20,319,535 
 Operating diluted net income per common share: 
 $ 
 0.47 
 $ 
 0.44 
 $ 
 0.45 
 $ 
 0.40 
 $ 
 0.38 
 Tangible Common Equity/Tangible Assets
 (1)
 
Tangible stockholders' equity 
 $ 
 223,246 
 $ 
 217,183 
 $ 
 209,095 
 $ 
 231,583 
 $ 
 225,088 
 
Tangible total assets
 (2)
 $ 
 2,845,735 
 $ 
 2,791,540 
 $ 
 2,767,945 
 

 $ 
 2,719,474 
 $ 
 2,677,382 
 Tangible Common Equity/Tangible 
Assets 
 7.84% 
 7.78% 
 7.55% 
 8.52% 
 8.41% 
 (1) 
The Company believes these non-GAAP measurements are 
key indicators of the ongoing earnings power 
of the Company. 
 (2) 
Since the Company has no intangible assets, 
tangible stockholders’ equity and tangible total 
assets are the same amounts as stockholders’ equity 
 and total assets, respectively, as calculated under GAAP. 
 (3) 
Excludes the dilutive effect, if any, of shares of common stock issuable upon exercise 
of outstanding stock options. 

 
 
 Table of Contents 
 

 

 50 
USCB Financial Holdings, Inc. 
Q1 2026 Form 10-Q 
 Item 3. 
Quantitative and Qualitative Disclosures About Market Risk 
 
 As a smaller reporting company, 
we are not required to provide the information required 
by this item.
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.
USCB FINANCIAL HOLDINGS, INC. 10-Q

Item 2. Management’s Discussion and Analysis
